Don’t throw the switch on desktop PCs just yet

Despite the talk of imminent doom, many of the nation's businesses are still quietly labouring away with desktop PCs, says Amro Gebreel

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Amro Gebreel

The idea of selling hardware is unfashionable in many respects, eclipsed by the cloud and managed services, with recent headlines about the ongoing decline in the PC market adding to the feeling of gloom.

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Digital transformation is a phrase that means many things to many people but for it to have any real relevance to the channel then it needs to mean a chance to make money. This guide will share some of the recent developments in the channel and the latest thoughts about the issue.

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But if you were to wander through most offices in the UK, the evidence of extensive desktop use would be overwhelming. Sure, there would also be tablets, smartphones and laptops in use but many would still be using the humble old desktop.

Under the hood you can assume that many will be running Windows XP, with large numbers yet to formulate transition plans to Windows 8, but aside from the |worry over the end of support, the experience for most users will be a good one. Their machines will have the power to cope with a range of applications and provide a chance to surf the web, making them arguably as productive as a counterpart on a tablet.

But because of the stress the analysts put on the decline in unit shipments, it is rare to sit down with someone keen to start a conversation about the importance of hardware, not just in the channel but also to customers. But start asking and they are happy to talk about a world where innovation has been continual and users are continuing to look to hardware to provide the basis of the ICT experience.

Simon Harbridge, CEO at Stone Group, is one such advocate of the PC who talks about it being a core part of its business and something that continues to really matter to the public sector. He talks of innovation and of the desktop delivering a really decent “bang for the buck”.

High inventories and slow sales

Each quarter, the big analyst houses bring out the numbers covering PC shipments, and the arrows are usually pointing downwards with some words of optimism about the future and the prospects of some positive growth in the market, making it harder to believe the analyst houses.

Depending on how you look at things – some include tablets and ultrabooks and some don’t – the overall picture for the traditional desktop PC and the laptop are fairly bleak. Hopes that there would be a bounce following the arrival of Windows 8 failed to materialise and users continue to head for more mobile form factors in their droves.

The most recent IDC numbers can be used as an example of the general state of things across Europe. The UK was one of the stronger countries when it came to PC sales in the second quarter with -14% year-on-year as the market continued to struggle.

The latest EMEA PC tracker results from IDC showed that, across EMEA as a whole, the market continued to contract in the second quarter with slow demand and high inventory levels attributed as reasons why the channel resisted putting in large hardware orders on behalf of their customers.

Year on year the market declined by 22.2% in the second quarter, with 19.6 million units being shipped, made up of 12.4 million portable shipments (down by 26%) and 7.2 million desktops (a decrease of 14.6%).

”The second quarter continued to be affected by large inventory in several countries. April and May were weak, as expected, as most vendors, retailers and distributors focused on stock reduction, and while June was supported by starting replenishment ahead of the back to school and product transitions, the volume of new orders remained constrained as caution prevailed in particular in retail,” said Chrystelle Labesque, research manager, EMEA Personal Computing.

“The PC market is going through a major transition with evolving form factors and a larger product portfolio, but the expansion of the overall client device market continues to drive increasing consumer spending and will also support key opportunities for the industry in the commercial space,” she added.

The PC is caught in the crosshairs of not just sluggish economic conditions but also a trend in the market away from that form factor. There will be some desktop refresh at some point but the days of old when every three years saw large volumes sold are clearly over.

You don’t have to be an analyst to predict that the next few quarters will continue to add more red ink to the charts. Talk about the end of the PC era having arrived will only get louder over the second half of this year.

Reasons to be cheerful

Expanding on those points there are several reasons to remain optimistic about pitching hardware. The first reason why desktop hardware remains a channel play is because the technology is familiar. For a lot of customers the desktop remains a major part of their IT estate. There are several elements that appeal to customers, including price, established IT support experiences and not having to navigate staff through too much of a desktop journey.

Not only have desktops come down in price over the last few years but an organisation with a fleet of PCs can cannibalise old systems for parts and peripherals, making life that little bit easier.

There is also little change for the IT support teams and staff to cope with, as most will have grown up with the technology.

A good example of where cost matters and why PCs still linger on the desk lies in the public sector, where they remain a fixture for many civil servants up and down the country.

Talk up innovation

The second reason why the desktop remains an option for the channel to pitch, is that innovation has taken place. Although it has not quite had the impact many would have hoped for, the arrival in October 2012 of Windows 8 in theory was going to take the desktop into the future. The driving idea was touch, which would enable users to have a tablet-type experience on their desktop. The problem – as we all know, and the PC shipment figures have borne out – has been that the customer base was not quite ready.

The arrival of Windows 8.1 might help remedy matters as it brings back some of the traditional functionality but you certainly cannot fault Microsoft for trying to evolve the desktop through its latest software.

But innovation has not just stopped with the OS. In December 2012, a raft of hybrid products from all the household PC names came onto the market. A combination of the portability of a tablet with the touch screen and the option of the laptop keyboard functionality was meant to be a winner.

The latest second quarter PC tracker numbers from IDC indicate that, so far – despite the hybrids and the ultraslim notebooks – the uptake from customers has been slow. That might pick up but the market seems to be harder to convince when it comes to desktop technology than it is when the magic word “iPad” is mentioned.

Resellers pitching a desktop or laptop need to talk up the innovation that has happened in design, software and applications to dispel the idea that all the R&D efforts have been going into other parts of the hardware industry.

Perhaps the final point that resellers need to consider when pondering the role of the desktop and laptop in their overall solution pitch is that change takes time. The attention on bring your own device (BYOD) and the rush by some boards to make sure that their executives all have the latest sexy tablet might have given the impression that a whirlwind of change is taking place.

The future of the PC market

Things take time and just looking at the large numbers of users that have yet to formulate an XP exit strategy will illustrate clearly how many people are nowhere near making decisions to walk away from technology they have used for many years.

One of the consequences of the extended downturn and its repercussions has been the manifest difficulty of predicting PC refresh cycles and that has not only made life harder for the channel but also added to the complications for analysts looking for market patterns.

It might be unfashionable to talk about the desktop market rather than cloud, mobility and big data, but there cannot be many customers that don’t have a stake in that technology. The future will look different with touchscreen devices dominating most workplaces but, for now, it would be a mistake to assume that a tablet sale is what is required and the channel might struggle to get its hands on what is seen by many as consumer technology.

Despite all the doom and gloom and the analyst figures showing haemorrhaging shipments, it is not time to walk away from the PC market. The sales might be slightly harder to justify but for many customers the technology still has a major role to play.

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